Corruption reform rewrites business rules in Sri Lanka
Originally published in Sunday Observer on 2026-06-14.
Read Original Article on Sunday ObserverCore Argument
Last year CIABOC received 8,409 complaints. A former President has been arrested over alleged misappropriation of public funds, a sitting energy minister indicted, a 1996 World Cup captain placed under a procurement case. The National Anti-Corruption Action Plan 2025 to 2029 is live, the Proceeds of Crime Act passed, and electronic asset declaration is mandatory for public officials. Colombo boardrooms read this as political theatre or as a compliance threat. Both readings are strategic errors. The structural weakness being exposed is not that corrupt individuals existed. It is that Sri Lankan firms learned to scale around a weak governance environment rather than on top of a strong one. A generation built its advantage on relationship management: who you knew at Customs, who could expedite a licence, who could navigate a tender. In a low-trust system access was the scarcest resource, so this was rational. But access does not compound. It does not transfer across markets, cannot be systematised, audited or sold to an investor. A firm whose moat is relationships hits a wall the moment it grows beyond their reach, or the moment an anti-corruption commission removes them. That wall is why Sri Lankan firms stall at mid-size so reliably. Sceptics note that enforcement is uneven, cases collapse on weak evidence, there is no beneficial ownership registry and the promised Independent Public Prosecutor's Office has not been delivered. All true, and the conclusion drawn from it is wrong. The drive being incomplete is precisely why firms that build governance capacity now sit ahead of the institutional curve. Singapore proves the link is not theoretical. In 1965 it had smuggling, organised crime and corruption in public administration. It gave the CPIB operational independence reaching senior ministers, stripped discretion out through digital licensing and transparent procurement, and professionalised the civil service. It did not produce perfect government. It produced credible government, and credibility was the asset that unlocked the capital.
What I'd Revise Now
Two months on, the piece's central advice holds and one of its assumptions does not. I wrote that the drive being incomplete was a reason to build ahead of the curve, because the institutional curve "will catch up." That assumed the direction of travel was settled. It is not. On 31 August 2026, Transparency International Sri Lanka filed a Supreme Court petition, SC/SD 90/26, challenging the proposed Anti-Corruption (Amendment) Bill No. 51 of 2026, an amendment to the very Act that gave CIABOC its expanded mandate. The Independent Public Prosecutor's Office remains unrealised. So the honest reading now is that reform is not merely incomplete, it is contested, and by the organisation most associated with pushing for it. A business planning on a steady one-way improvement in the operating environment is planning on something not currently in evidence. That makes the strategic conclusion stronger rather than weaker, and I would say so more plainly than I did. Every argument in this column for building clean contracting, auditable financials and documented procurement rested on those things being valuable when the environment improves. They are not. They are valuable because they are the only assets in this list that do not depend on the environment at all. A firm that can survive an audit is a better firm whether or not the Prosecutor's Office ever opens. Build governance capacity because it compounds internally. Treat any national improvement as upside, not as the thesis.
Key Takeaways
- Sri Lankan firms learned to scale around weak governance rather than on top of strong governance, and that choice has a ceiling
- Access does not compound, transfer across markets, survive audit, or sell to an investor
- FDI below 1 percent of GDP is a governance verdict, not an investment mystery
- As discretion is squeezed out of procurement, Customs and licensing, advantage shifts from access to ability
- Singapore changed the architecture rather than the culture, and credibility rather than perfection was what attracted capital